Industry stakeholders have expressed concern about the federal government’s decision to waive import duties on electric vehicles, mass-transit buses and selected machinery.

The experts warned that the move could have unintended consequences for Nigeria’s fragile automotive sector.

The Managing Partner of Transtech Industrial Consulting, Luqman Mamudu, described the tariff differential as a core pillar of the Nigeria Automotive Industry Development Plan (NAIDP), deliberately designed to give locally assembled vehicles a cost advantage over fully built imports.

He stated that adjusting this structure, despite its good intentions, must be handled with caution.

Mamudu noted that many vehicle-exporting countries heavily subsidise their automotive industries, meaning that lowering tariffs in Nigeria could quickly tilt the market back in favour of imports, particularly as key NAIDP support programmes remained only partially implemented.

Mamudu also challenged the notion that tariffs were the main driver of high vehicle prices in Nigeria.

He instead pointed to structural pressures, including exchange-rate depreciation, forex scarcity, port and logistics charges, inflation, and rising global vehicle costs, as the dominant factors shaping vehicle pricing.

Referring to the Finance Act 2020, he observed that the earlier removal of tariff incentives for commercial vehicle assembly failed to deliver sustained price reductions and instead led to a contraction in local assembly, as operators reverted to full importation. He argued that this outcome should guide current policy decisions.

While acknowledging government efforts to balance affordability with industrial growth, Mamudu warned that weakening protective measures for local assembly could reverse the modest gains achieved in the sector over the past decade.

He added that industry groups, such as the Nigerian Automotive Manufacturers Association (NAMA), must intensify their advocacy to ensure that policymaking reflects operational realities.

Despite these concerns, he maintained that Nigeria’s long-term fundamentals remained strong, particularly within the African Continental Free Trade Area (AfCFTA), which offers significant opportunities for regionally competitive production.

Also, Femi Eguaikhide, Deputy Managing Director of RT Briscoe and Chairman of the LCCI Auto and Allied Sector Group, described the development as indicative of policy inconsistency, particularly in light of earlier efforts to promote local manufacturing.

He clarified that prevailing tariff assumptions may be misleading, noting that the 35 per cent levy had already been suspended at the start of the current administration.

He also stressed that the new tariff adjustments could not take effect until they are formally gazetted by the government.

Eguaikhide emphasised that the situation underscores the urgent need to enact Nigeria’s automotive policy into law to ensure stability and boost investor confidence.

Without this, he warned, manufacturers may be reluctant to commit to local production, particularly because reduced tariffs make imported vehicles more price-competitive.